exv10w1



 





EXHIBIT 10.1




EMPLOYMENT AGREEMENT




This Employment Agreement (the “Agreement”) is entered into as of February 14,
2004 between DIRECT ALLIANCE CORPORATION, an Arizona corporation (“Company”),
and BRANSON SMITH (“Executive”) to be effective as of November 1, 2003.



R E C I T A L S




A. Effective as of November 1, 2003 Executive shall be employed by Company
in the position of President. Prior to such date, Executive was employed
by Insight Enterprises, Inc. (“Parent”).



B. Executive and Parent are parties to an Employment Agreement that was
entered into on July 1, 1999, as amended as of July 1, 2001 (the “Old
Agreement”).



C. Company has decided to offer Executive a new employment agreement, the
terms and provisions of which are set forth below.



NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:




     1. TERMS OF AGREEMENT.



          (a) Replacement of Old Agreement. Except as specifically provided in this
Agreement, this Agreement shall replace and supersede the Old Agreement for all
purposes as of November 1, 2003.



          (b) Initial Term. Executive shall be employed by Company for the duties
set forth in Section 2 for a two-year term, commencing as of November 1, 2003
and ending on October 31, 2005 (the “Initial Term”), unless sooner terminated
in accordance with the provisions of this Agreement.



          (c) Renewal Term; Employment Period Defined. On each successive day after
the commencement of the Initial Term, without further action on the part of
Company or Executive, this Agreement shall be automatically renewed for a new
2-year term dated effective and beginning upon each such successive day (the
“Renewal Term”); provided, however, that Company may notify Executive, or the
Executive may notify the Company, at any time, that there shall be no renewal
of this Agreement, and in the event of such notice,the Agreement shall
immediately cease to renew and shall terminate naturally at the end of the then
current Renewal Period. No severance or other post-termination compensation
will be due or payable in the event of a termination resulting from
non-renewal. The period of time commencing as of the date hereof and ending on
the effective date of the termination of employment of Executive under this or
any successor Agreement shall be referred to as the “Employment Period.”



     2. POSITION AND DUTIES.



          (a) Job Duties. Company does hereby employ, engage and hire Executive as
its President, and Executive does hereby accept and agree to such employment,
engagement, and hiring. Executive’s duties and authority during the Employment
Period shall be such executive and managerial duties as the Board of Directors
of Parent (the “Board”) shall reasonably determine. Executive will devote full
time on behalf of the Company, or such lesser amount of time as the Board may
determine, reasonable absences because of illness, personal and family
exigencies excepted.



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          (b) Best Efforts. Executive agrees that at all times during the Employment
Period he will faithfully, and to the best of his ability, experience and
talents, perform the duties that may be required of and from him and fulfill
his responsibilities hereunder pursuant to the express terms hereof.
Executive’s ownership of, or participation (including any board memberships)
in, any entity (other than Company) must be disclosed to the Board; provided,
however, that Executive need not disclose any equity interest held in any
public company or any private company that is not engaged in a competing
business as defined in Section 10 of this Agreement when such interest
constitutes less than 5% of the issued and outstanding equity of such public or
private company.



     3. COMPENSATION.



          (a) Base Salary. Company shall pay Executive a “Base Salary” in
consideration for Executive’s services to Company at the rate of $250,000 per
annum. The Base Salary shall be payable as nearly as possible in equal
semi-monthly installments or in such other installments as are customary from
time to time for Company’s or Parent’s executives. The Base Salary may be
adjusted from time to time in accordance with the procedures established by
Company or Parent for salary adjustments for executives, provided that the Base
Salary shall not be reduced.



          (b) Incentive Compensation..




	 	 	 	Executive shall be entitled to an incentive bonus, calculated and
payable quarterly, equal to two percent (2.0%) of Company’s “net
earnings”.The Compensation Committee of the Board (the “Committee”)
may, but is not required to, award additional bonus amounts for
extraordinary performance or to adjust for inequities resulting from
application of the formula.
	 
	 	(1)	 	For purposes of calculating Executive’s incentive bonus
pursuant to this Subsection (b), Company’s “net earnings” shall be
Company’s consolidated net after tax earnings calculated in
accordance with accounting principles generally accepted in the
United States (US GAAP) and applicable Securities and Exchange
Commission regulations, prior to any incentive bonus amounts for
Executive and other executives of Company. All allocations of
overhead expense from Parent to determine Company’s “net earnings”
shall be on a basis consistent with the allocation methods applied
for prior accounting periods, provided, however, that changes thereto
required by U.S. Generally Accepted Accounting Principles shall be
deemed acceptable. The amounts payable pursuant to this
subparagraph (b) shall be paid on or before thirty (30) days after
the public financial reporting by Parent at the end of the applicable
fiscal quarter.
	 
	 	(2)	 	If upon final presentation of consolidated financial statements
to Parent by the Parent’s outside Certified Public Accountants, the
“net earnings” of Company requires adjustment, then, within thirty
(30) days after such presentation, Company or Executive, as the case
may be, shall pay to the other the amount necessary to cause the net
amount of incentive bonus paid to be the proper amount after
adjustment; provided that if Executive shall pay Company pursuant to
the provisions of this clause (3), then the amount the Executive
shall pay will be reduced by the taxes withheld by Company
attributable to such amount (“Withheld Portion”), and the Company
shall apply the Withheld Portion toward Company’s withholding
obligations with regard to any subsequent payments of Base Salary and
incentive compensation made pursuant to Sections 3(a) and 3(b).





          (c) Incentive and Benefit Plans. Executive will be entitled to
participate in those incentive compensation and benefit plans reserved for
Company’s or Parent’s executives, including any stock option plan maintained by
Parent, in accordance with the terms of such compensation and benefit plans.
Additionally,



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Executive shall be entitled to participate in any other benefit
plans sponsored by Company or Parent, including but
not limited to, any savings plan, life insurance plan and health insurance
plan available generally to employees of Company or Parent from time to time,
subject to any restrictions specified in, or amendments made to, such plans.



     4. BUSINESS EXPENSES.



          The Company will reimburse Executive for any and all necessary, customary
and usual expenses which are incurred by Executive on behalf of Company,
provided Executive provides Company with receipts to substantiate the business
expense in accordance with Company’s policies or otherwise reasonably justifies
the expense to the Company.



     5. DEATH OR DISABILITY.



          (a) Death. This Agreement shall terminate upon Executive’s death.
Executive’s estate shall be entitled to receive the Base Salary due through the
date of his death. Company shall also pay to Executive’s estate a prorated
portion of any incentive compensation to which Executive would have been
entitled (had Executive not died) for the year in which this Agreement
terminated due to Executive’s death. No Base Salary or other payment or
benefit will be payable with respect to any period after death except as
expressly provided elsewhere in this Agreement.



          (b) Disability. This Agreement shall also terminate in the event of
Executive’s “Disability”. For purposes of this Agreement, “Disability” means
the total and complete inability of Executive to perform the essential duties
associated with his normal position with Company (after any accommodations
required by the Americans with Disabilities Act or applicable state law) due to
a physical or mental injury or illness that occurs while Executive is actively
employed by Company. Any dispute concerning whether Disability has occurred
will be determined by a physician selected by mutual agreement of Company and
Executive. If this Agreement is terminated due to Executive’s Disability,
Executive shall receive all of the payments and benefits called for by Section
6(c).



     6. TERMINATION BY COMPANY.



          (a) Termination for Cause. Company may terminate this Agreement at any
time during the Initial Term or any Renewal Terms for “Cause” upon written
notice to Executive. If Company terminates this Agreement for “Cause,”
Executive’s Base Salary shall immediately cease, and Executive shall not be
entitled to severance payments, incentive compensation payments or any other
payments or benefits pursuant to this Agreement, except for any vested rights
pursuant to any benefit plans in which Executive participates and any accrued
compensation, vacation pay and similar items. For purposes of this Agreement,
the term “Cause” shall mean the termination of Executive’s employment by
Company for one or more of the following reasons:




     (1) The criminal conviction for any felony involving theft or
embezzlement from Company or any affiliate;




     (2) The criminal conviction for any felony involving moral
turpitude that reflects adversely upon the standing of Company in
the community; or




     (3) The criminal conviction for any felony involving fraud
committed against Company, any affiliate or any individual or entity
that provides goods or services to, receives goods or services from
or otherwise deals with Company or any affiliate.



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     (4) Acts by Executive that constitute repeated and material
violations of this Agreement, any written employment policies of
Company or any written directives of Company. A violation will not
be considered to be “repeated” unless such violation has occurred
more than once and after receipt of written notice from Company of
such violation.



          Any termination of Executive when there is not Cause is “without Cause.”
If Company terminates Executive for Cause, and it is later determined as
provided in Section 11 of this Agreement that Cause did not exist, Company will
pay Executive the amount he would have received under this Agreement if his
employment had been terminated by Company without Cause, plus interest at the
Prime Rate published by the Wall Street Journal on the date of termination.
Such payments and interest shall be calculated as of the effective date of the
initial termination. Payment shall be made within fifteen (15) days after such
later determination is made.



          (b) Termination Without Cause. Company also may terminate Executive’s
employment at any time during the Initial Term or any Renewal Term without
Cause. If Company terminates this Agreement pursuant to this paragraph, Company
shall provide Executive with ninety (90) days advance written notice. This
Agreement shall continue during such notice period. The termination of this
Agreement shall be effective on the ninetieth (90th) day (the “Termination
Date”) following the day on which the notice is given.



     Company may, at its discretion, place Executive on a paid administrative
leave during all or any part of said notice period. During the administrative
leave, Company may bar Executive’s access to Company’s offices or facilities if
reasonably necessary to the smooth operation of Company, or may provide
Executive with access subject to such reasonable terms and conditions as
Company chooses to impose.



          (c) Severance Compensation. Should Executive’s employment by Company be
terminated without Cause, Executive shall receive as a lump sum immediately
upon such termination an amount equal to the total amount of his Base Salary
for the remainder of the Initial Term or Renewal Terms, if later, less 90 days,
determined as if the employment of the Executive had not been terminated prior
to the end of such term and as if the Executive had continued to perform all of
his obligations under this Agreement and as an employee and officer of the
Company. Executive shall have no duty to mitigate damages in order to receive
the compensation described by this Subsection and the compensation shall not be
reduced or offset by other income, payments or profits received by Executive
from any source.



          (d) Incentive Compensation. Executive shall not be entitled to receive any
incentive compensation payments for the fiscal year in which his employment is
terminated for Cause or any later years. If Executive is terminated without
Cause, Executive shall receive as a lump sum immediately upon such termination
the bonus that would have been awarded determined as if the employment of the
Executive had not been terminated prior to the end of the latest Renewal Term,
as if Executive had continued to perform all of his obligation under this
Agreement and as an employee of the Company, and as if the financial
performance of Company and/or Parent continues as it had been for the
immediately preceding last four (4) fiscal quarters ended prior to the
Termination Date, consistent with the following five sentences. If the
Termination Date occurs during Q1 2004, the incentive compensation payment
shall be based on Executive’s percentage under the Old Agreement and the
financial performance of Parent during all of FY 2003. If the Termination Date
occurs during Q2 2004, Executive’s incentive compensation payments shall be
based on his percentage under the Old Agreement and Parent’s performance during
the last three quarters of FY 2003, plus his percentage under Section 3(b) of
this Agreement and Company’s performance during Q1 2004. If the Termination
Date occurs during Q3 2004, Executive’s incentive compensation payments would
be based on his percentage under the Old Agreement and Parent’s performance
during the last two quarters of FY 2003, plus his percentage under Section 3(b)
of this



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Agreement and Company’s performance during the first two quarters of
2004. If the Termination Date occurs during Q4 2004,
Executive’s incentive compensation payments would be based on his
percentage under the Old Agreement and Parent’s performance during the last
quarter of FY 2003, plus his percentage under Section 3(b) of this Agreement
and Company’s performance during the first three quarters of 2004. If the
Termination Date is after December 31, 2004, the incentive compensation payment
shall be based on the financial performance of Company for the immediately
preceding last four (4) fiscal quarters ended prior to the Termination Date and
shall be consistent with Section 3(b) of this Agreement. Executive shall have
no duty to mitigate damages in order to receive the compensation described by
this Subsection and the compensation shall not be reduced or offset by other
income, payments or profits received by Executive from any source. If there is
no binding incentive compensation program, policy, or practice in effect on the
effective date of the termination, Company, in the exercise of its discretion,
may elect to pay Executive a portion of the incentive compensation to which he
would have been entitled (had his employment not terminated) for the prorated
portion, up to the date of termination, of the year in which his employment is
terminated without Cause.



          (e) Other Plans. Except to the extent specified in this Section 6 and as
provided in this Subsection (e), termination of this Agreement shall not affect
Executive’s participation in, distributions from, and vested rights under any
employee benefit, stock option, restricted stock or other equity-based plan of
Company, which will be governed by the terms of those respective plans, in the
event of Executive’s termination of employment. If Company terminates
Executive without Cause on or before December 31, 2004, at the time the
termination is effective, Company shall extend the time within which Executive
may exercise any then vested stock options until April 11, 2005. Executive
shall have no duty to mitigate damages in order to receive the compensation
described by this Subsection and the compensation shall not be reduced or
offset by other income, payments or profits received by Executive from any
source.



     7. TERMINATION BY EXECUTIVE



          (a) General. Executive may terminate this Agreement at any time, with or
without “Good Reason.” If Executive terminates this Agreement without Good
Reason, Executive shall provide Company with ninety (90) days advance written
notice. If Executive terminates this Agreement with Good Reason, Executive
shall provide Company with thirty (30) days advance written notice. Company
may, at its discretion, place Executive on a paid administrative leave during
all or any part of any such notice period. During the administrative leave,
Company may bar Executive’s access to Company’s offices or facilities if
reasonably necessary to the smooth operation of Company, or may provide
Executive with access subject to such reasonable terms and conditions as
Company chooses to impose



          (b) Good Reason Defined. For purposes of this Agreement, “Good Reason”
shall mean and include each of the following (unless Executive has expressly
agreed to such event in a signed writing):




     (1) The removal of Executive’s title of President of Company or
the assignment to Executive by Company of duties that are not senior
executive duties by nature except in connection with the termination
of Executive’s employment by Company either without Cause or for
Cause, Executive’s death or Disability, termination by Executive
either with or without Good Reason, or the expiration of the
Agreement without renewal;




     (2) The recommended travel of Executive by the Board in
furtherance of Company business which is materially more extensive
than at November 1, 2003 (the “Relevant Date”);




     (3) The assignment of Executive by the Company to a location
more than 50 miles from the present executive offices of the
Company.



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     (4) Reduction by Company of Executive’s Base Salary as set
forth in this Agreement or as the same may be increased from time to
time.




     (5) Failure by Company to compensate Executive pursuant to the
same incentive and equity formulas as are used for all senior
executives of Company whose incentive is based on Company
performance or to continue in effect any savings, life insurance,
health and accident or disability plan in which Executive is
participating on the Relevant Date (or plans which provide Executive
with substantially similar benefits) or the taking of any action by
Company which would adversely affect Executive’s participation in or
materially reduce his benefit under any of such plans or deprive him
of any material fringe benefit enjoyed by him as of the Relevant
Date or any later date. Amendment or modification of said plans, to
the extent required pursuant to applicable federal law and the
procedures set forth in the respective plan, or amendments of such
plans that apply to either all employees generally or all senior
executives shall not be considered to be “Good Reason” for purposes
of this clause (5).




     (6) Failure of Company to obtain a specific written agreement
satisfactory to Executive from any successor to the business, or
substantially all the assets, of Company to assume this Agreement or
issue a substantially similar agreement.




     (7) The termination of this Agreement by Company without Cause
or any attempted termination by Company purportedly for Cause if it
is thereafter determined that Cause did not exist under this
Agreement with respect to the termination.




     (8) Breach of any material provisions of this Agreement by
Company which is not cured within thirty (30) days after receipt by
Company of written notice of such breach from Executive.




     (9) Any action taken by Company over the specific,
contemporaneous, written objection of the Executive that is likely
(i) to cause a material reduction in the value of this Agreement to
Executive or (ii) to materially impair Executive’s abilities to
discharge his duties hereunder. This provision is not intended to
affect either the Company’s or Executive’s right to terminate this
Agreement as provided for elsewhere herein.



          (c) Effect of Good Reason Termination. If Executive terminates this
Agreement for Good Reason (as defined in Section 7(b)), it shall for all
purposes be treated as a termination by Company without Cause. Without
limiting the generality of the previous sentence, if Executive terminates his
employment with Good Reason on or before December 31, 2004, at the time the
termination is effective, Company shall extend the time within which Executive
may exercise any then vested stock options until April 11, 2005.



          (d) Effect of Termination without Good Reason. If Executive terminates
this Agreement without Good Reason, while the termination shall not be
characterized as a termination for Cause, it shall for all purposes, result in
the same compensation and have the same effect on other benefits, including
options, as a termination for Cause.



     8. CHANGE IN CONTROL OF COMPANY



          (a) General. Company considers the maintenance of a sound and vital
management to be essential to protecting and enhancing the best interests of
Parent and its shareholders. Company recognizes that the continuing possibility
of an unsolicited tender offer or other takeover bid for Parent or a sale of
all or



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substantially all of the assets or stock of Company may be unsettling to
Executive and other senior executives of Company and
may result in the departure or distraction of management personnel to the
detriment of Parent and its shareholders. The Board and the Committee have
previously determined that it is in the best interests of Parent and its
shareholders for Company to minimize these concerns by making this Change in
Control provision an integral part of this Employment Agreement, which would
provide the Executive with a continuation of benefits in the event the
Executive’s employment with Company terminates under certain limited
circumstances.



          This provision is offered to help assure a continuing dedication by
Executive to his duties to Company notwithstanding the occurrence of a tender
offer or other takeover bid involving Parent or a sale of the stock or assets
of Company. In particular, the Board and the Committee believe it important,
should Parent receive proposals from third parties with respect to the future
of Parent or Company, to enable Executive, without being influenced by the
uncertainties of his own situation, to assess and advise the Board whether such
proposals would be in the best interests of Parent and its shareholders and to
take such other action regarding such proposals as the Board might determine to
be appropriate. The Board and the Committee also wish to demonstrate to
Executive that Company is concerned with his welfare and intends to see he is
treated fairly.



          (b) Continued Eligibility to Receive Benefits. In view of the foregoing
and in further consideration of Executive’s continued employment with Company,
if a Change in Control occurs, Executive shall be entitled to a lump-sum
severance benefit provided in subparagraph (c) of this Section 8 if, prior to
the expiration of twenty-four (24) months after the Change in Control,
Executive notifies Company of his intent to terminate his employment with
Company for Good Reason or Company terminates Executive’s employment without
Cause. If Executive triggers the application of this Section by terminating
employment for Good Reason, he must do so within one hundred twenty (120) days
following his receipt of notice of the occurrence of the last event that
constitutes Good Reason. The full severance benefits provided by this Section
shall be payable regardless of the period remaining until the expiration of the
Agreement without renewal.



          (c) Receipt of Benefits. If Executive is entitled to receive a severance
benefit pursuant to Section 8(b) hereof, Company will provide Executive with
the following benefits:




     (1) A lump sum severance payment within ten (10) days following
Executive’s last day of work equal to the sum of (i) two (2) times
the greater of Executive’s annualized Base Salary in effect on the
date of termination of employment or Executive’s highest annualized
Base Salary in effect on any date during the term of this Agreement
and (ii) two (2) times the higher annual bonus that would have been
awarded, based on the method of calculation then in effect, during
the one of the two immediately preceding fiscal years which would
produce the higher award.




     (2) Executive shall be vested in any and all stock bonus and
stock option plans and agreements of Company in which Executive had
an interest, vested or contingent. If applicable law prohibits such
vesting, then Company shall pay Executive an amount equal to the
value of benefits and rights that would have, but for such
prohibition, have been vested in Executive.




     (3) Executive shall be compensated in a manner selected by the
Company to provide for life, disability, accident and group health
and dental insurance benefits, at substantially the levels Executive
was receiving immediately prior to his termination, for a period of
time expiring upon the earlier of (i) the end of the period of 42
months following his termination of employment or (ii) the day on
which he becomes eligible to receive any substantially similar
continuing health care benefits under any plan or program of any
other employer or source without being required to pay any premium
with respect thereto. At Company’s option, Company may satisfy the
obligation to provide the benefits pursuant to this Section by
either (1) paying for or reimbursing



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Executive at reasonable
intervals for the actual cost of such benefits (and Executive shall
cooperate with
Company in all respects in securing and maintaining such
benefits, including exercising all appropriate COBRA elections and
complying with all terms and conditions of such coverage in a manner
to minimize the cost), (2) payment of a lump sum in the amount of
the present value, discounted at Company’s effective borrowing rate,
of the premiums for such benefits for the continuing coverage period
(which shall be calculated based on the conclusive presumption that
the cost or premiums will remain constant at the rate existing for
COBRA coverage immediately following termination), or (3) a
combination of the foregoing options (for example, Company may elect
to pay Executive’s premiums during the period of time covered by
COBRA, and thereafter pay a lump sum to cover the present value of
the remaining cost).



     Executive shall have no duty to mitigate damages or loss in order to
receive the benefits provided by this Section or in this Agreement. If
Executive is entitled to receive the payments called for by this Section 8(c),
Executive’s right to receive the compensation provided by Section 6(c) or 7(c)
shall to the extent of such payments be reduced.



          (d) Change in Control Defined. For purposes of this Agreement, a “Change
in Control” means any one or more of the following events:




     (1) When the individuals who, at the beginning of any period of
two years or less, constituted the Board cease, for any reason, to
constitute at least a majority thereof unless the election or
nomination for election of each new director was approved by the
vote of at least two thirds of the directors then still in office
who were directors at the beginning of such period;




     (2) A change of control of the Parent or the Company through a
transaction or series of transactions, such that any person (as that
term is used in Section 13 and 14(d)(2) of the Securities Exchange
Act of 1934 (1934 Act”)), excluding affiliates of the Company as of
the Effective Date, is or becomes the beneficial owner (as that term
is used in Section 13(d) of the 1934 Act) directly or indirectly, of
securities of the Parent representing 20% or more of the combined
voting power of the Parent’s then outstanding securities or
securities of the Company representing a majority of the combined
voting power of the Company’s then outstanding securities;




     (3) Any merger, consolidation or liquidation of the Parent in
which the Parent is not the continuing or surviving company or
pursuant to which stock would be converted into cash, securities or
other property, other than a merger of the Parent in which the
holders of the shares of stock immediately before the merger have
the same proportionate ownership of common stock of the surviving
company immediately after the merger;




     (4) Any merger, consolidation or liquidation of Company with
non-affiliated parties in which the Company is not the continuing or
surviving company or pursuant to which Company’s stock would be
converted into cash, securities or other property;




     (5) The shareholders of the Parent or Company approve any plan
or proposal for the liquidation or dissolution of Parent or the
Company; or




     (6) Substantially all of the assets of the Parent or Company
are sold or otherwise transferred to parties that are not within a
“controlled group of corporations” (as defined in Section 1563 of
the Code) in which Company is a member at the Relevant Date.



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          (e) Good Reason Defined. For purposes of this Section, “Good Reason” shall
have the meaning assigned to it in Section 7(b), except that for this purpose
only, Section 7(b)(1) shall read, “[t]the failure of Company and any ultimately
controling successor entity to continue Executive’s title of President of
Company or the equivalent successor entity or the assignment to Executive by
Company or such successor entity of duties that are materially different from
Executive’s duties before the Change in Control or that are inconsistent with
his position as President of Company or such successor entity unless Executive
accepts a position at Parent or one of its subsidiaries.”



          (f) Notice of Termination by Executive. Any termination by Executive under
this Section 8 shall be communicated by written notice to Company which shall
set forth generally the facts and circumstances claimed to provide a basis for
such termination.



          (g) Gross-Up Allowance




          (1) General Rules. The Code places significant tax consequences
on Executive and Company if the total payments made to Executive
due, or deemed due, to a Change in Control exceed prescribed limits.
For example, if Executive’s “Base Period Income” (as defined below)
is $100,000 and Executive’s “Total Payments” exceed 299% of such
Base Period Income (the “Cap”), Executive will be subject to an
excise tax under Section 4999 of the Code of 20% of all amounts paid
to him in excess of $100,000. In other words, if Executive’s Cap is
$299,999, he will not be subject to an excise tax if he receives
exactly $299,999. If Executive receives $300,000, he will be subject
to an excise tax of $40,000 (20% of $200,000). In the event such a
consequence occurs, for any reason, due to this Agreement or
otherwise, Company shall pay to Executive a “gross-up allowance”
equal in amount to the sum of (i) the excise tax liability of
Executive on the Total Payments, and (ii) all the total excise,
income, and payroll tax liability of Executive on the “gross-up
allowance,” further increased by all additional excise, and income,
and payroll tax liability thereon, which increase shall be part of
the “gross-up allowance” for purpose of computing the gross-up
allowance. Company shall indemnify and hold Executive harmless from
such additional tax liability for the income and payroll tax arising
from the “gross-up allowance” and all excise tax arising with
respect to compensation and other payments made to Executive under
this Agreement and excise, income, and payroll tax on the “gross-up
allowance, and all penalties and interest thereon. The purpose and
effect of the gross-up allowance is to cause Executive to have the
same net compensation after income, excise, and payroll taxes that
Executive would have if there was no tax under Code § 4999.




          (2) Special Definitions. For purposes of this Section, the
following specialized terms will have the following meanings:




	 	(i)	 	“Base Period Income”. “Base Period Income” is an
amount equal to Executive’s “annualized includable
compensation” for the “base period” as defined in Sections
28OG(d)(1) and(2)of the Code and the regulations adopted
thereunder. Generally, Executive’s “annualized includable
compensation” is the average of his annual taxable income from
the Company for the “base period,” which is the five calendar
years prior to the year in which the Change of Control occurs.
	 
	 	(ii)	 	“Cap” or 280G Cap”. “Cap” or “28OG Cap” shall
mean an amount equal to 2.99 times Executive’s “Base Period
Income.” This is the maximum amount which he may
receive without becoming subject to the excise tax imposed by
Section 4999 of the




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	 	 	 	Code or which Company may pay without
loss of deduction under Section 28OG of the Code.
	 
	 	(iii)	 	“Total Payments”. The “Total Payments” include
any “payments in the nature of compensation” (as defined in
Section 280G of the Code and the regulations adopted
thereunder), made pursuant to this Agreement or otherwise, to
or for Executive’s benefit, the receipt of which is contingent
or deemed contingent on a Change of Control and to which
Section 28OG of the Code applies.





          (h) Effect of Repeal. In the event that the provisions of Sections 28OG
and 4999 of the Code are repealed without succession, this Section shall be of
no further force or effect.



          (i) Employment by Successor. For purposes of this Agreement employment by
a successor of Company or a successor of any subsidiary of Company that has
assumed this Agreement, or continuing employment by Parent, Company or any
other subsidiary of Parent after a Change in Control, shall be considered to be
employment by Company or one of its subsidiaries. As a result, if Executive is
employed by Company or by such a successor, or by Parent or one of its other
subsidiaries, following a Change in Control, he will not be entitled to receive
the benefits provided by Section 8 unless his employment with the Company or
the successor is subsequently terminated without Cause or he terminates his
employment for Good Reason.



     9. CONFIDENTIALITY.



          Because of Executive’s knowledge of and participation in executive issues
and decisions as a result of his present and former executive positions, for
purposes of Sections 9 and 10 of this Agreement, “Company” shall be interpreted
to include Parent, Company and all of Parent’s direct and indirect
subsidiaries.



          Executive covenants and agrees to hold in strictest confidence, and not
disclose to any person, firm or company, without the express written consent of
Company , any and all of Company’s confidential data, including but not limited
to information and documents concerning Company’s business, customers, and
suppliers, market methods, files, trade secrets, or other “know-how” or
techniques or information not of a published nature or generally known (for the
duration they are not published or generally known) which shall come into his
possession, knowledge, or custody concerning the business of Company, except as
such disclosure may be required by law or in connection with Executive’s
employment hereunder or except as such matters may have been known to Executive
at the time of his employment by Company. This covenant and agreement of
Executive shall survive this Agreement and continue to be binding upon
Executive after the expiration or termination of this Agreement, whether by
passage of time or otherwise so long as such information and data shall be
treated as confidential by Company.



     10. RESTRICTIVE COVENANTS.



          (a) Covenant-not-to-Compete. In consideration of Company’s agreements
contained herein and the payments to be made by it to Executive pursuant
hereto, Executive agrees that, for a period of time equal to the time remaining
in the Initial Term or any Renewal Term (or if, but only if, a court or
tribunal of final authority finds that this period is unenforceable because it
is unreasonably long, then, if it would shorten the duration, for one (1) year)
following his termination of employment and so long as Company is continuously
not in default of its obligations to provide payments or employment-type
benefits to Executive hereunder or under any other agreement, covenant, or
obligation, he will not, without prior written consent of Company, consult with
or act as an advisor to another company about activity which is a “Competing
Business” of such company in the Restricted Territory, as defined below. For
purposes of this Agreement, Executive shall be deemed to be engaged



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in a
“Competing Business” if, in any capacity, including proprietor, shareholder,
partner, officer, director or employee, he engages or
participates, directly or indirectly, in the operation, ownership or
management of the activity of any proprietorship, partnership, company or other
business entity which activity is competitive with the then actual business in
which Company is engaged on the date of, or any business contemplated by the
Company’s business plan in effect on the date of notice of, Executive’s
termination of employment. Nothing in this subparagraph is intended to limit
Executive’s ability to own equity in a public company constituting less than
five percent (5%) of the outstanding equity of such company, when Executive is
not actively engaged in the management thereof. If requested by Executive,
Company shall furnish Executive with a good-faith written description of the
business or businesses in which Company is then actively engaged or which is
contemplated by Company’s current business plan within 30 days after such
request is made, and only those activities so timely described in which Company
is, in fact, actively engaged or which are so contemplated may be treated as
activities which are competitive with Company.



          (b) Non-Solicitation. Executive recognizes that Company’s customers are
valuable and proprietary resources of Company. Accordingly, Executive agrees
that for a period of one year following his termination of employment, and only
so long as Company is continuously not in default of its obligations to provide
payments or employment-type benefits to Executive hereunder or under any other
agreement, covenant, or obligation, he will not directly or indirectly, through
his own efforts or through the efforts of another person or entity, solicit
business in the Restricted Territory for or in connection with any Competing
Business from any individual or entity which obtained products or services from
Company at any time during Executive’s employment with Company; he will not
solicit business for or in connection with a Competing Business from any
individual or which may have been solicited by Executive on behalf of Company
and he will not solicit, hire or engage employees of Company who would have the
skills and knowledge necessary to enable or assist efforts by Executive to
engage in a Competing Business.



          (c). Remedies: Reasonableness. Executive acknowledges and agrees that a
breach by Executive of the provisions of this Section 10 will constitute such
damage as will be irreparable and the exact amount of which will be impossible
to ascertain and, for that reason, agrees that Company will be entitled to an
injunction to be issued by any court of competent jurisdiction restraining and
enjoining Executive from violating the provisions of this Section. The right to
an injunction shall be in addition to and not in lieu of any other remedy
available to Company for such breach or threatened breach, including the
recovery of damages from Executive.



          Executive expressly acknowledges and agrees that (i) the Restrictive
Covenants contained herein are reasonable as to time and geographical area and
do not place any unreasonable burden upon him; (ii) the general public will not
be harmed as a result of enforcement of these Restrictive Covenants; and (iii)
Executive understands and hereby agrees to each and every term and condition of
the Restrictive Covenants set forth in this Agreement.



          Executive also expressly acknowledges and agrees that Executive’s
covenants and agreements in this Section 10 shall survive this Agreement and
continue to be binding upon Executive after the expiration or termination of
this Agreement, whether by passage of time or otherwise



          (d) Restricted Territory. Executive and Company understand and agree that
Company’s business is not geographically restricted and is unrelated to the
physical location of Company facilities or the physical location of any
Competing Business, due to extensive use of the Internet, telephones, facsimile
transmissions and other means of electronic information and product
distribution. Executive and Company further understand and agree that
Executive will, in part, work toward expanding the Company’s markets and
geographic business territories, and will be compensated for performing this
work on behalf of Company.



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          Accordingly, Company has a protectable business interest in, and the
parties intend the Restricted Territory to encompass, each and every location
from which Executive could engage in Competing Business in any
country, state, province, county or other political subdivision in which
Company has customers, employees, suppliers, distributors or other business
partners or operations. If, but only if, this Restrictive Territory is held to
be invalid on the ground that it is unreasonably broad, the Restricted
Territory shall include each location from which Executive can conduct business
in any of the following locations: the United States (including each state in
which the Company conducts sales or operations), Canada, the United Kingdom,
and each political subdivision of each of the foregoing countries. If, but
only if, this Restrictive Territory is held to be invalid on the grounds that
it is unreasonably broad, then the restricted territory shall be the United
States (including each state in which the Company conducts sales or
operations), Canada, the United Kingdom, any other country in which the
Company conducts sales or operations, and each political subdivision of each of
the foregoing countries in which Company can articulate a legitimate
protectable business interest.



     11. DISPUTE RESOLUTION.



          (a) Mediation. Any and all disputes arising under, pertaining to or
touching upon this Agreement, or the statutory rights or obligations of either
party hereto, shall, if not settled by negotiation, be subject to non-binding
mediation before an independent mediator. Notwithstanding the foregoing, both
Executive and Company may seek preliminary injunctive or other judicial relief
if such action is necessary to avoid irreparable damage during the pendency of
the proceedings described in this Section 11. Any demand for mediation shall be
made in writing and served upon the other party to the dispute, by certified
mail, return receipt requested, at the address specified in Section 13. The
demand shall set forth with reasonable specificity the basis of the dispute and
the relief sought. The mediation hearing will occur at a time and place
convenient to the parties in Maricopa County, Arizona, within thirty (30) days
of the date of selection or appointment of the mediator. Mediation or the
waiver of mediation by both parties shall be a condition precedent to
Arbitration.



          (b) Arbitration. In the event that the dispute is not settled through
mediation, the parties shall then proceed to binding arbitration before an
independent arbitrator. The mediator shall not serve as the arbitrator. EXCEPT
AS PROVIDED IN SECTION 11 (a), ALL DISPUTES INVOLVING ALLEGED UNLAWFUL
EMPLOYMENT DISCRIMINATION, TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY,
OR ALLEGED EMPLOYMENT TORT COMMITTED BY COMPANY OR A REPRESENTATIVE OF COMPANY,
INCLUDING CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR
PUBLIC POLICY, SHALL BE RESOLVED PURSUANT TO THIS SECTION 11 AND THERE SHALL BE
NO RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL.



The arbitration hearing shall occur at a time and place convenient to the
parties in Maricopa County, Arizona, within sixty (60) days of selection or
appointment of the arbitrator unless such time period is extended by the
arbitrator for good cause shown. If Company has adopted, with the consent of
Executive, a policy that is applicable to arbitrations with executives, the
arbitration shall be conducted in accordance with said policy, to the extent
that the policy is consistent with this Agreement and the Federal Arbitration
Act, 9 U.S.C. §§ 1-16. If no such policy has been adopted, the arbitration
shall be governed by the National Rules f or the Resolution of Employment
Disputes of the American Arbitration Association (“AAA”) in effect on the date
of the first notice of demand for arbitration. Notwithstanding any provisions
in such rules to the contrary, the arbitrator shall issue findings of fact and
conclusions of law, and an award, within f if teen (15) days of the date of the
hearing unless the parties otherwise agree.



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          (c) Procedure. Issues of procedure, arbitrability, or confirmation of
award shall be governed by the Federal Arbitration Act, 9 U.S. C. SS 1-16,
except that court review of the arbitrator’s award shall be that of an
appellate court reviewing a decision of a trial judge sitting without a jury.



          (d) Expenses. The costs and expenses of any arbitration shall be borne by
Company. Should Executive or Company, at any time, initiate mediation or
arbitration for breach of this Agreement, Company shall reimburse Executive for
all amounts spent by Executive to pursue such mediation or arbitration
(including reasonable attorneys fees and costs), regardless of the outcome,
unless the mediator or arbitrator finds Executive’s action to have been
frivolous and without merit.



     12. BENEFIT AND BINDING EFFECT



          This Agreement shall inure to the benefit of and be binding upon Company,
its successors and assigns, including but not limited to any company, person,
or other entity which may acquire all or substantially all of the assets and
business of Company or any company with or into which Company may be
consolidated or merged, and Executive, his heirs, executors, administrators,
and legal representatives, provided that the obligations of Executive may not
be delegated.



     13. NOTICES



          All notices hereunder shall be in writing and delivered personally or sent
by registered or certified mail, postage prepaid and return receipt requested:



	 	 	 	 	 
	

	 	If to Company, to:
	 	Insight Enterprises, Inc.
	

	 	 	 	Attn: CEO and General Counsel
	

	 	 	 	1305 West Auto Drive
	

	 	 	 	Tempe, Arizona 85283
	 
	 	 	 	 
	

	 	With a copy to:
	 	The Chairman of Parent’s
	

	 	 	 	Compensation Committee
	 
	 	 	 	 
	

	 	If to Executive, to:
	 	Branson Smith
	

	 	 	 	6862 N. La Place
	

	 	 	 	Tucson, AZ 85750







Either party may change the address to which notices are to be sent to it by
giving ten (10) days written notice of such change of address to the other
party in the manner above provided for giving notice. Notices will be
considered delivered on personal delivery or on the date of deposit in the
United States mail in the manner provided for giving notice by mail.



     14. ENTIRE AGREEMENT



          The entire understanding and agreement between the parties has been
incorporated into this Agreement, and this Agreement supersedes all other
agreements and understandings between Executive and Company with respect to the
relationship of Executive with Company, except with respect to other continuing
or future bonus, incentive, stock option, health, benefit and similar plans or
agreements.



     15. GOVERNING LAW



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          This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Arizona.



     16. CAPTIONS



          The captions included herein are for convenience and shall not constitute
a part of this Agreement.



     17. DEFINITIONS



          Throughout this Agreement, certain defined terms will be identified by the
capitalization of the first letter of the defined word or the first letter of
each substantive word in a defined phrase. Whenever used, these terms will be
given the indicated meaning.



     18. SEVERABILITY



          If any one or more of the provisions or parts of a provision contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision or part of a provision of this Agreement, but this
Agreement shall be reformed and construed as if such invalid, illegal or
unenforceable provision or part of a provision had never been contained herein
and such provisions or part thereof shall be reformed so that it would be
valid, legal and enforceable to the maximum extent permitted by law. Any such
reformation shall be read as narrowly as possible to give the maximum effect to
the mutual intentions of Executive and Company.



     19. TERMINATION OF EMPLOYMENT



          The termination of this Agreement by either party also shall result in the
termination of Executive’s employment relationship with Company in the absence
of an express written agreement providing to the contrary. Neither party
intends that any oral employment relationship continue after the termination of
this Agreement.



     20. TIME IS OF THE ESSENCE



          Company and Executive agree that time is of the essence with respect to
the duties and performance of the covenants and promises of this Agreement.



     21. NO CONSTRUCTION AGAINST EITHER PARTY



          This Agreement is the result of negotiation between Company and Executive
and both have had the opportunity to have this Agreement reviewed by their
legal counsel and other advisors. Accordingly, this Agreement shall not be
construed for or against Company or Executive, regardless of which party
drafted the provision at issue. The language in all parts of this Agreement
shall in all cases be construed as a whole according to its fair meaning and
not strictly for or against either party. The Section headings contained in
this Agreement are for reference purposes only and will not affect the meaning
or interpretation of this Agreement in any way. Whenever the words “include,”
“includes,” or “including” are used in the Agreement, they shall be deemed to
be followed by the words “without limitation.



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	 	DIRECT ALLIANCE CORPORATION, an
	

	 	Arizona Corporation
	 
	 	 
	

	 	By: /s/Timothy A. Crown
	

	 	

	

	 	Timothy A. Crown
	

	 	Its CEO
	 
	 	 
	

	 	/s/ Branson Smith
	

	 	

	

	 	Branson Smith







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